Kenneth Arrow

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Kenneth Arrow bigraphy, stories - Economist

Kenneth Arrow : biography

August 23, 1921 –

Kenneth Joseph Arrow (born August 23, 1921) is an American economist and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972. To date, he is the youngest person to have received this award, at 51.

In economics, he is considered an important figure in post-World War II neo-classical economic theory. Many of his former graduate students have gone on to win the Nobel Memorial Prize themselves. Arrow’s impact on the economics profession has been tremendous. For more than fifty years he has been one of the most influential of all practicing economists.

His most significant works are his contributions to social choice theory, notably "Arrow’s impossibility theorem", and his work on general equilibrium analysis. He has also provided foundational work in many other areas of economics, including endogenous growth theory and the economics of information.

Arrow remains active on the international scene through a variety of initiatives including trustee of Economists for Peace and Security and a member of the Advisory Board of Incentives for Global Health, the not-for-profit behind the Health Impact Fund.

Academic career

He is currently the Joan Kenney Professor of Economics and Professor of Operations Research, Emeritus at Stanford University. He is also a founding member of the Pontifical Academy of Social Sciences. He is also currently a member of the Science Board of Santa Fe Institute.

He is a trustee of Economists for Peace and Security. He was a convening lead author for the Intergovernmental Panel on Climate Change. He is also Editor of the Annual Review of Economics.

Five of his former students have gone on to become Nobel Prize winners. These include Eric Maskin, John Harsanyi, Michael Spence and Roger Myerson.www-siepr.stanford.edu/ArrowShovenMay09.pdf

He served in the government on the staff of the Council of Economic Advisers in the 1960s with Robert Solow.http://millercenter.org/president/policy/economic

A collection of Arrow’s papers are housed at the Rubenstein Library at Duke University.

Awards and honors

Arrow was elected a Fellow of the American Academy of Arts and Sciences in 1959. He was one of the recipients of the 2004 National Medal of Science, the nation’s highest scientific honor, presented by President George W. Bush for his contributions to research on the problem of making decisions using imperfect information and his research on bearing risk.

Theorems

Arrow’s impossibility theorem

Arrow’s monograph Social Choice and Individual Values derives from his Ph.D. thesis. In it he sets out a key result (in one final form).

General Impossibility Theorem: It is impossible to formulate a social preference ordering that satisfies all of the following conditions:

  1. Nondictatorship: The preferences of an individual should not become the group ranking without considering the preferences of others.
  2. Individual Sovereignty: each individual should be able to order the choices in any way and indicate ties
  3. Unanimity: If every individual prefers one choice to another, then the group ranking should do the same
  4. Freedom From Irrelevant Alternatives: If a choice is removed, then the others’ order should not change
  5. Uniqueness of Group Rank: The method should yield the same result whenever applied to a set of preferences. The group ranking should be transitive.

The theorem has tremendous implications for welfare economics and theories of justice. It was extended by Amartya Sen to the liberal paradox which argued that given a status of "Minimal Liberty" there was no way to obtain Pareto optimality, nor to avoid the problem of social choice of neutral but unequal results.

An example of this would be to have the following choices to divide a cake between three people. Let us call them A, B and C.

Choice 1: A gets nothing, B and C get half each. Choice 2: B gets nothing, A and C get half each. Choice 3: C gets nothing, A and B get half each. Choice 4: divide the cake equally.